“Institutions globally are not going to move backwards to legacy mainframe based systems”
Atlanta-based Global Payments has inked a major deal with AWS that will see it create a cloud-based processing platform for card issuers and sharply ramp up its ability to offer SaaS-based feature improvements for digital offerings, the $53 billion (by market capitalisation) payments heavyweight said this week.
Global Payments handles some 27 billion payments annually for customers ranging from small businesses, through to global casinos and banks. The new AWS-based platform will let financial institutions of any size “seamlessly operate the entire lifecycle of card issuance and management” it said in a release.
With AWS as preferred cloud provider, the company will use cloud-based storage, compute, database, security, analytics and machine learning.
Improvements in digital banking experience can be made faster in the cloud, and Global Payments’ CEO Jeff Sloan said that the arrangement would “level the playing field for large financial institutions” by giving them access to cloud-native offerings of the kind that startups and challenger banks offer.
It will also allow Global Payments to broaden its reach. As Sloan said on an earnings call late Monday: “Our collaboration broadens our geographic reach as AWS’s worldwide footprint reaches nearly every corner of the globe. No longer will we be limited to geographies where we have a TSYS physical data center location for Issuer services. Delivering our capabilities via Software-as-a-Service or SaaS means that we can build, test and scale in more markets more quickly than before.”
He added: “We believe that our target addressable market for Issuer solutions will more than triple, providing ample additional opportunities to grow and build on our track record of capturing market share.”
The CEO also pledged to “unbundle our services through the use of open APIs and deconstructive micro-services, which will allow us to sell elements of our issuer SaaS solutions via a new business model on an à la carte basis.”
The decision comes as the company guns for banks’ merchant payment businesses, many of which are still run-in house. (Global Payments offers authorisation services, settlement and funding services, customer support and help-desk functions, chargeback resolution, terminal rental, sales and deployment, payment security services, consolidated billing and statements and reporting).
As Global Payments’ COO Cameron Brady put it at a JP Morgan event in May 2020: “[The pandemic] has the potential to be a catalyst to drive more banks to thinking about exiting the business or strategically repositioning themselves around payments.
“I would say the dialogue we’re having thus far with some of our relationships around the globe would suggest that more and more banks are having to think about how do they position themselves around payments, what are the trends coming out of this experience mean for how they can continue to be competitive in the merchant business, and I’m hopeful that will drive more opportunities for us.”
CEO Sloan added this week: “We are also in discussions with multiple global payments bank partners outside of the US regarding TSYS Issuer processing solutions. We expect the AWS collaboration to catalyze those opportunities.”
The multi-year AWS deal comes after Global Payments closed a $21.5 billion mega-merger with rival TSYS — amid a wave of industry consolidation, and as pressure mounts on card payment providers from alternative payments providers. (Last year saw Fiserv buy First Data for $23 billion and FIS buy Worldpay for $43 billion).
That integration is ongoing, Sloan told investors. Global Payments expects $350 million in cost savings within three years of closing as a result of the merger.
Across the company’s Merchant Solutions segment, adjusted net revenue fell 21% fto $906 million for the second quarter. That was blamed on one major client loss. “Normalizing for the effect of the single product turned down by one client in the second quarter last year, and our commercial card portfolio, which is being impacted by limited travel spending, Issuer revenue would have been roughly flat for the quarter and positive for the month of June”, the company said.